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Sectoral Imputed Multilateral Aid

TL;DR

ONE calculates sectoral imputed multilateral aid to provide a more comprehensive picture of bilateral donors' sectoral spending by including estimates of sectors targeted through their core contributions to the multilateral system. Our methodology is based on the OECD's discontinued approach but uses disbursements rather than commitments.

What is the difference between bilateral and multilateral development assistance?

DAC data on donor countries' ODA measure the outflow of resources and divide it into two categories: bilateral and multilateral. Total ODA figures, for example, include donors' direct contributions to developing countries plus their contribution to the multilateral system.

Multilateral ODA consists of the contributions provided to multilateral organisations that are not earmarked. By definition, therefore, these contributions are not disaggregated by country or region.

The DAC reports how much donors have contributed to each multilateral agency. It also reports on how much has been spent by most multilateral agencies, by country and sector. As part of its standard set of statistics, the DAC estimates what proportion of each DAC donor country's contribution to multilateral agencies can be imputed for each developing country or region. This is what is commonly referred to as "imputed multilateral aid".

Sectoral imputed multilateral aid data is similar to "imputed multilateral aid" but it is further disaggregated in order to estimate how spending by multilateral agencies targeting specific sectors can be imputed to each DAC donor country.

How are ONE's sectoral imputed multilateral aid numbers calculated?

ONE's methodology for calculating sectoral imputed multilateral aid is based on the approach previously used by the OECD.1 The primary objective of our imputations is to present a more comprehensive picture of bilateral donors' sectoral spending by including estimates of the sectors that are targeted through their core contributions to the multilateral system.

Approximation

As the OECD notes,2 any methodology for imputing multilateral flows can only ever be seen as an approximation. Delays in reporting, incomplete data on multilateral outflows, turning grants into loans, and restrictions on pooling mean that multilateral outflows in a given year do not exactly match bilateral donors' core contributions to the multilateral system.

Calculation steps

Sectoral imputed multilateral aid for a given DAC donor is calculated following three broad steps:

Step 1: Calculate sector spending shares

Using data from the Creditor Reporting System, we calculate each multilateral agency's total flows to a given sector as a share of its total spending (core resources only). Whenever possible, sectoral spending is analysed at the 'CRS agency' level.3

Both ODA and OOF are taken into account at this stage, following previous OECD practice.4 Similarly, three-year spending data are used to produce the sector spending shares. That means that the shares for year n are produced using spending data for years n, n-1 and n-2.

Step 2: Get donor contributions to multilaterals

Using data from the Members Total Use of the Multilateral System database, we calculate the bilateral donor's core ODA contributions to each multilateral agency (for year n). Where possible, the inflow amounts for each multilateral organisation are calculated at the 'CRS agency' level.

Step 3: Calculate imputed sectoral aid

For each donor, sectoral imputed multilateral aid figures are calculated by multiplying the contributions made to each multilateral organisation (obtained through step 2) by the sector spending shares for each specific multilateral organisation (obtained through step 1).

To calculate a donor's total sectoral imputed multilateral aid, the same calculations are repeated for every multilateral agency, for every sector.

Calculation flow

Calculating a donor's imputed multilateral contributions to a sector through a specific agency:

flowchart LR
    A[<b>OECD DAC</b><br/><b>donor</b>]
    B[<b>Multilateral agency</b><br/><i>e.g., IDA, EU Institutions,<br/>Gavi, FAO, ...</i>]
    C[<b>Specific sector</b><br/><i>e.g., health, education,<br/>infrastructure</i>]

    A -->|"<b>ODA to multilateral</b><br/><b>agencies (US$)</b><br/><i>Core ODA contributions,<br/>from 'Members Total Use of<br/>the Multilateral System'<br/>database, year = n</i><br/><b>(Step 2)</b>"| B

    B -->|"<b>Outflows to specific</b><br/><b>sectors (%)</b><br/><i>ODA + OOF, from 'Creditor's<br/>Reporting System' database,<br/>year = n + n-1 + n-2</i><br/><b>(Step 1)</b>"| C

Example

To illustrate, here's how France's imputed multilateral aid to the education sector through IDA would be calculated for 2019:

  1. The World Bank's International Development Association (IDA) allocated 8.5% of its resources to the Education sector over 2017-2019.
  2. France provided US$444 million to IDA as core resources in 2019.
  3. France's imputed multilateral aid to the education sector through IDA for 2019 was US$37.8 million (8.5% of its US$444 million core contribution to IDA).

Key difference from OECD approach

There is a key difference between ONE's approach and the (discontinued) OECD approach:

Disbursements vs Commitments

ONE's imputations focus on (gross) disbursements rather than commitments. This applies throughout: for multilateral spending shares, for core contributions inflows data, and for the resulting sectoral multilateral imputed aid numbers.

Alternative approaches

A few donors — including the United Kingdom and, for some sectors, France — have developed alternative means of imputing sectoral multilateral aid to their overall aid spending. Generally, such approaches are incomplete (do not cover all DAC donors) and are not necessarily comparable across donor countries.

ONE's imputed multilateral sectors aid numbers can be explored using our ODA Dashboard.

  1. In the past, the OECD has released studies of imputed multilateral support to certain sectors like health or education, however they have not kept up with this practice. Their methodology is roughly explained here: OECD's methodology for calculating sectoral imputed multilateral aid ↩

  2. OECD methodology for calculating imputed multilateral ODA ↩

  3. Unfortunately, the Members Total Use of the Multilateral System database identifies each multilateral organisation (and its respective agencies, where applicable) using different identifiers from the Creditor Reporting System. This introduces complexity and a degree of subjectivity to the analysis, since matching the inflows data (core contributions) and outflows data (from the CRS) is not always a trivial or obvious task. The ability for external users to follow the money from the bilateral donor to the end recipient would be greatly improved through the use of a more coherent or standardised set of unique identifiers for organisations, regardless of whether they are the recipient (of a core contribution) or the donor. ↩

  4. DAC donors' unearmarked contributions to the multilateral system finance agencies' core budgets. This methodology therefore focuses on the sectors targeted by a given agency's total spending. However, the amount imputed back to the bilateral donor is proportional only to the ODA contribution it makes to a particular multilateral agency. ↩